Chapter #5 Product Differrentiation
Jan 20, 2016
Chapter #5Product Differrentiation
Victoria’s Secret
• Who is Victoria?– Retired fashion model– Thinking about starting a new family– Has an adventurous sexy side– Loves good food, classical music and great wine– Travels frequently, at home in New York, Paris, LA or
London– Fashion tastes are edgy but never to the extreme– Sexy and alluring never cheap, trashy or vulgar– Beautiful and sexy, knows it is her brains not her looks
that have enabled her to succeed in life
• Created a lifestyle
Product Differentiation
• It’s about perception
• Sam Adams
• Rolex vs Casio
Ways firms can differentiate their products
• Directly on the attributes of its products or services, or…– Product features– Product complexity– Timing of product introduction– Location
Ways firms can differentiate their products
• On relationships between itself and its customers, or…– Product customization– Consumer marketing– Product reputation
Ways firms can differentiate their products
• On linkages within or between firms– Linkages among functions within a
firm– Linkages with other firms– Product Mix– Distribution Channels– Service and Suppor
Focusing on the attributes of a firm’s Product or Services
• Product Features
• Product Complexity– Bic– Mount Blanc– Cross
Focusing on the attributes of a firm’s Product or Services
• Timing of Product Introduction– First Mover
• Location– Disney World
Focusing on the relationship between a firm and its Customer
• Product Customization– Mountain Bikes vs Schwinn
Focusing on the relationship between a firm and its Customer
• Consumer Marketing– Mountain Dew– Pepsi– CocaCola– Fanta
• Reputation– Positioning
Focusing on Links within and Between Firms
• Links between functions– Effective multi-disciplinary teams
• Links with other firms– NASCAR
• Co-brand– Product placements
Focusing on Links within and Between Firms
• Product Mix– Products or services are technologically
linked – Single set of customer purchases several
of a firm’s products or services
• Distribution Channels
• Service and Support
Product Differentiation and Environmental Threats
• Entry
• Rivalry
• Substitutes
• Suppliers– Sugar
• Buyers– Quasi-monopoly
Product Differentiation and Environmental Opportunities
• Xerox & Paper
Ethical dilemma does a product do what it says it will?
– Lose weight– Hair loss
Product Differentiation and Sustained Competitive Advantage
• Rare Bases
• Imitability– Inform competitors– Product features
Substitutes for Product Differentiation
• Many of the bases of product differentiation can be partial substitutes for each other
• Using other strategies
3M
Can Firms be both low cost and differentiated?
• The argument for no– Stuck in the middle
Can Firms be both low cost and differentiated?
• The argument for yes– Successful innovation leads to
increased sales– Increased sales leads to lower
costs